(Video) Should You Buy A Foreclosure?

/ Alex McFadyen Mortgage Broker & The Mortgage Pug/

When buying a property, one of the most enticing options (when price is considered) can be buying a foreclosure. We brought in Michelle Perrault of Sutton West Coast Realty in Surrey BC to break down some reasons WHY and WHY NOT to buy a foreclosure.

Before you move forward in pursuing purchasing a foreclosure property you should consider the pros and cons!

Here are some of the reasons WHY to consider buying a Foreclosure in Canada according to Michelle:

  1. Price - Often because many clients do not know the process (going to court, making a bid, lending options) many buyers will shy away from actually moving forward with buying a foreclosure. Because of these points and more, buyers can often secure a property at a lower price than market value!
  2. Quick Equity - Building on the previous point, if you can purchase this property at a great price, often you can leverage the new found EQUITY to sell the property at a profit, re-finance to invest or even renovate or hold and enjoy the lower cost for similar properties.

On the other side, here are a few reasons why a Foreclosure may NOT be for you:

  1. As Is - When buying a foreclosure property, the bank makes no representations or warranties on the property. So if the previous tenant caused serious damage, there was some material defects (like a roof or hot water tank) or anything else, you would not have any recourse.
  2. No Items - If the property was owner occupied, it is very possible the owner could have removed the fridge/stove etc. since these are technically not part of the property the bank does NOT own them. You should always plan for the worst and budget for these items.
  3. Emotion -  At the end of the day, you could have waited months for the closing date, had everything taken care of and someone can show up at court with a better offer. Best to leave the emotions aside on this type of purchase!

Foreclosures can be a great opportunity, though not for everyone. Make sure to talk to a Mortgage broker who knows which lenders will lend on them, how they work and be able to explain them. Also, consider a real estate agent who specializes in this property as they be able to coach you through the process.

Have any more questions?

E-mail me or call me 604-619-3319 we can grab a coffee and chat!